One King for Another……
In the first two parts of this series I argued that the pyramid model which lies at the heart of ‘left’ and ‘right’ conceptions of society is limited and ultimately a barrier to understanding what happened in the lead up to the credit crunch and its aftermath.
I argued that a dynamic vector model of society is a better reflection of reality because it captures fluidity or movement within the economic system. The original dynamic vector model I suggested was made up of a ‘Feudal’ or integrating vector and later an added ‘Capitalist’ or disintegrating vector.
An economic vector is precisely a means of concentrating or distributing wealth and power. All societies are concerned fundamentally with this; collecting and concentrating social power and wealth and then re-distributing it to those who are ‘worthy’. All politics and economics are derived from this central process.
A dynamic vector model offers insight into specific episodes in history, (the American Continental War was one such example I used), and into the very idea of history and progress as we receive it from established sources. More fundamentally, dynamic vector history offers the observation that establishment history can no longer claim some supposed essential difference between feudal and capitalist elite often characterised as the ‘Enlightenment’.
On the contrary, the vector model shows that it was entirely possible for the feudal and emerging capitalist systems to exist side by side at the ‘top’ of society. Rather than capitalism being a supposedly unstoppable revolutionary force, it was feudalists recognising continuing inexorable disempowerment at the hands of the capitalist vector that brought about ‘revolutionary’ civil conflicts. This is nowhere truer than in the case of King Charles and the Puritans in England.
In fact, rather than capitalism (as the Anglo Saxon Establishment would have you believe), being implacably opposed to feudalism, throughout its development the capitalist vector has systematically relied on a feudalist vector for its protection and survival. The rhetoric is of undying hostility (in the Protestant world at least), but the reality is one of pragmatic accommodation.
To understand the relationship between feudalism and capitalism, the capitalist recognition of the necessity of feudalism, is to begin to perceive a key difference between Germanic and Anglo Saxon (Protestant) ideology and continental (Catholic), ideology in Western Europe.
The creation of a capitalist vector allows a section of society to potentially permanently dis-integrate itself from society as a whole. But the capitalist vector needs to re-create a version of the feudal vector if it is to disengage from actively managing society and concentrate on making itself as separately wealthy and powerful as possible.
The more advanced and sophisticated a capitalist elite, the more it relies upon a ‘socialist’ feudalist vector to manage and integrate the remainder of society. The ability to manage feudalistic redistribution of wealth is usually taken as the key determinant of capitalist development; the successful (or unsuccessful), evolution of every advanced capitalist nation can be described in terms of a relationship with feudalism.
The secret is to tame the’ excesses’ of feudalism. This is the historical necessity of Protestantism in North Western Europe; to reform/undermine the feudal integrated society so that it can become a useful servant to the capitalist vector. Or think of it as a Catholic/Samson and a Protestant/Delilah who cut his hair while he slept and delivered him into the hands of the Philistines.
‘She is mocking us…not Samson’
This leads to the observation that the ‘socialist’ left is in reality the justification for a feudal vector. This is the service that the ‘left’ performs for capitalism. This is why establishment left parties exist; if they did not perform a useful service they would certainly not be there. If you doubt this observation, consider the history of left parties in Latin America in this context.
The welfare, integrating, feudal left is useful not because it offers the promise of benefits of the future, but because it offers the hope of preserving some of the protections and freedoms from the past!
The idea that people could have been in some ways freer in the past than they are now will be met with horror and even outrage by proponents of Germanic Capitalism and Socialism alike for this is blasphemy against the Germanic religion of Progress ( as in; ‘when we took over, that was progress’…)
Implacable opposition to anything that challenges the idea of a ‘Dark Ages’ is one of many similarities that Socialist Cane and Capitalist Abel (or is it the other way?), have in common but neither wishes to acknowledge.
This way of understanding the relationship between left and right, feudal and capitalist, is more than an intellectual curiosity. It leads us directly to a deeper understanding of the post credit crunch world.
One of the main reasons I began the United States of Everywhere blog was to try to understand the comprehensive and systematic failure of the left in the aftermath of the credit crunch. It doesn’t matter whether you accept or support any of the ideas, preconceptions or prejudices of the left; understanding its effective collapse over the past couple of decades is vital to building up a useful picture of why we are where we are.
In theory it was all over after the financial mega collapse- all the ‘left’ had to do was to pick up the marbles and declare the game won. Capitalism was now totally dependent upon the mercy of the state; ‘free market capitalism’ if it had ever really existed was completely discredited now. But that was very certainly not what happened.
In fact the Neo Conservative right has been consistently strengthened over the subsequent years and even more startling, the libertarian right has emerged as the only social force with anything substantially critical to say about the systematic nature of the changes we have seen.
In attempting to understand the failure of the left I realised that I would have to go outside the bounds of traditional economic argument. I began to describe Whiteism which links Germanic culture, history and identity to contemporary questions of economics.
Financialisation is intimately linked to questions of the development of the left and its relationship to feudalism and especially the development of Neo Conservatism. And this in turn leads to the relationship between Trotskyism and Neo Conservatism in the context of American history.
Capitalists successfully disengaged by means of creating the modern welfare state (feudal vector) in Europe beginning in the late 1940’s but it took another two decades until this process was played out in 1960’s America.
America’s capitalist vector had priorities that were substantially historically different to those of Western Europe but as I noted America was always willing to pragmatically embrace feudal practice if it thought it necessary (as in Washington) .
This brings us to the rather ironically named ‘New Deal’, (since it should be more accurately described as the ‘Old Deal’), programme instituted by Franklin Roosevelt in the 1930’s. Although it later came to be regarded with widespread acceptance, (rhetorically at least), at the time the New Deal was seen by many as a fundamental betrayal of a central tenet of American ideology; that a society could survive and thrive with only a capitalist vector. Venomous hatred of the New Deal betrayal of this ideal is a fault-line that runs right down to the bedrock of America.
Despite this fundamental opposition, practical necessity meant that the provisions of the New Deal survived more or less intact right up to the inauguration of the Great Society. But the New Deal was always fundamentally an ad hoc programme. Somewhere lurked the hope/belief that once America got back on the right track again it could go back to the Good Old Days of pure capitalism.
By the time of LBJ’s ‘Great Society’ and the Vietnam War, the American elite had little appetite for a return to the past, ( well, the old past anyway..). It became clear to the 60’s American elite that to get in line with modern western thinking it was going to be necessary to institute a version of feudal history to make up for the one that America didn’t have.
In fact, the Great Society was the formal acceptance that there was no longer the hope of a temporary feudal fix in the form of a New Deal. Like everywhere else in the developed world the American elite would have to come to some kind of permanent accommodation with feudalism. This would make them in a sense irrevocably ‘liberal’. This in turn directly led to the birth of Neo Conservatism and the emergence of Nixon’s Moral (Silent) Majority. If there had to be a feudal vector then henceforth Neo Conservatives would battle to cast it in the Anglo Saxon image.
It is no co-incidence that within a decade or so of the Great Society Monetarist Milton Friedman had effectively conceded that there would have to be permanent state management of capitalism under the justification of controlling inflation.
Since the market would now be permanently under the constant control of the state through the central bank, Monetarists simply could not allow any left wing alternative to exist. If a comprehensive state programme to protect the market was justified, then in theory a comprehensive state programme instead of the market could be justified. (The tattered remnants of this argument are still around the political fringe today in the form of ‘peoples QE’)
This meant that there could not be an American left of any kind since it was possible in theory that they could be elected, and if elected they could control the central bank and if they could control the central bank they could control the economy, and that would be game over.
And so just at the moment that total state control of the economy became reality- the left dream for eight decades- the political services of the left were to be dispensed with. Neo Con Monetarists would displace the left and act as the new feudal bureaucracy.
Let us be absolutely clear what this means: That the Germanic nation state ‘left’ project has turned out to be the biggest game of bait and switch in the history of human society!
The call for a state run society was made in western Europe for nearly a century only for it to be exclusively turned over to extreme right wing ideology the moment it was actually achieved!
Since the arrival of Monetarism we have been watching the left clearing its desk, gathering its political belongings together in a cardboard box and being escorted from the building….
The left finally gets it….
It was a sure thing that the Monetarists on ascending to power, would seek to shrink the state and to shrink it in a specific way. Under Reagan talk swiftly turned to ‘welfare queens’ and so on. This was unsurprising.
But more interestingly that visceral hatred of the New Deal I referred to earlier made itself felt in the ongoing repeal of post Wall Street Crash banking regulation implemented by Roosevelt. And it was this legal reform that formally opened the door to financialisation.
And now we can close in on three central questions that have been there since the Credit Crunch but never satisfactorily answered:
What exactly is financialisation?
How exactly does it work?
Why did it appear exactly when it did?
So what exactly is financialisation?
It is a new vector, a new conduit for concentrating wealth and power. It operates alongside the capitalist vector and the feudal vector. This vector is actually physically constructed from the Democratisation of Money.
Just like the capitalist vector it originally acted as a conduit for concentration and redistribution- remember the ‘Big Bang’?, Remember the ‘share owning democracy’? Remember how the sons and daughters of Ordinary Joes could get a pair of red braces and make Big Bucks down on the trading floor?
Seems a long time ago now doesn’t it? But for a while at least the financial vector really did redistribution…
How does it work?
Capitalism turns power and wealth into money. Capital is exactly power and wealth expressed as money. You do stuff to get money.
But Financialisation does the exact opposite of Capitalism. Financialisation turns money into power and wealth. You do money ( literally make it), to get stuff
In other words it is the exact antithesis of the capitalist process or vector. In other words, Financialisation is Anti capitalism!
This is the real basis for the crude ( but to some degree perceptive), slogan that Financialisation is ‘socialism for the rich’.
Socialism was never the opposition to capitalism. In fact there never really was an opposition to capitalism until about twenty years ago. This is what makes the present period unprecedented. But the oppostion to capitalism is not very nice is it? No, but it is proving to be effective.
Why did Financialisation appear when it did?
The Monetarist attack on New Deal bank regulation set the stage for financialisation. But the real impetus for financialisation to grow came from shrinking the size of the state. The Democratised Money shadow economy is growing into the exact size and shape of space where western post war states used to be. The consequence of yet again failing to utilise feudalism effectively. I will explain why this is in the final part… (In the meantime you could think about Japanese feudalism and if that has anything to do with why QE started there..)